Daily Archives: November 5, 2022

A Week of Musk Era Twitter

At the end of this nightmare, I better get a cash prize

-unknown Twitter employee hoping to get laid off with severance pay

When I wrote last week’s post about Elon Musk acquiring Twitter, I figured there would be a few interesting twists but that the whole thing would play out over time.  I’ve been on both sides of mergers and acquisitions.  It is pretty much a fact of life with tech, bound as it is between attempts to satisfy Wall Street’s motto of “If you’re not growing you’re dying” and VCs and founders trying to cash out.  I’ve seen them done badly and I have seen it done well.

Tweet, tweet motherfuckers

Doing it well generally involves the “boiling the frog” method, a slow approach of small changes over a year or more.  Doing it badly means being in a hurry, trying to establish dominance, driving people out by doing things like firing everybody and making everybody re-apply for their jobs, and any number of other things that disrupt productivity and otherwise devalue the asset being purchased.  I’ve been through all of those bad routines and some more along the way.  I have some stories, but this post will drag on too long if I get side-tracked by that.

Financials

I wanted to run through the highlights of the week in chronological order, but everything that is being done is driven by the financial situation.  Musk paid $44 billion for Twitter, $12 billion of that came in the form of loans and, in order to make the payments on them Twitter needs to generate about a $1 billion in net profit annually.

Twitter occasionally makes money, more often though it operates at a loss.  You can Google the Twitter net profit numbers for details, or you can run through the Twitter thread that has lots of financial details and links to a list of sources in the end, but either way you will see that Twitter needs something drastic to happen in order to be able to put up those sort of numbers.

So he has a company that mostly loses money and needs a billion dollars of net profit out of it.  What is an egomaniac to do?

Advertisers and the Moderation Learning Path

I mentioned last week that, despite his promises, Musk cannot unleash the “free speech” revolution his follows seem to crave.  97% of Twitter’s income is from ad revenue and, as might be obvious to even Elon at this point, most brands don’t want to tie themselves to a toxic cesspool of conspiracies and misinformation.

And you can bleat about censorship, but this is capitalism in action.  This is literally the market place of ideas, and some ideas are so bad that they have negative value.  And the impact can be immediate.

Elon retweeting a deranged MAGA conspiracy theory (since deleted) about Paul Pelosi sent a message and some major advertisers are already holding off on more ad placement buy decisions until they see how this plays out.  That tweet undid his reassurances that Twitter wasn’t going to become a free for all hellscape.  He is trying to blame outside pressure, but it is clearly his own words, and Twitter’s complete inability to assure advertisers of anything reasonable because of Musk, that is killing ad revenue.

This is where a billionaire learns he doesn’t get to do whatever he wants if he is using somebody else’s money.  So he is currently speed running the lessons learned about online online moderation over the last 30 years.

Until Elon gets to the point where advertisers are comfortable that he has his erratic behavior under control… and him buying Twitter is a prime example of such behavior… income will suffer.

Basically his claim to want to deliver free speech to his followers… the moronic, ego-driven factor that got him into this mess… has been crushed because even billionaires need to bow to market forces… or at least they do if they want to stay billionaires, and Elon would rather be rich.  Of course the same people crying about this failure to deliver are keen to crush free speech they don’t like, so the howls of hypocrisy continue to flow.

Code Reviews, the 84 Hour Work Week, and Layoffs

The other way to boost profits is to cut staff.  The truth about a software company is that most of the value is in the staff who write the code, but staff is also a huge chunk of the expenses… and it is often the easiest substantial expense to cut.  Twitter can’t stop paying its internet bills, it can’t shut down its server farm, it can’t stop paying its taxes or rent.  All of those would impact the business immediately.

But you can lay a bunch of people off and skate by with the status quo for a while.  Anybody working at a company with more than a thousand people in it know that you can probably shed 10% of the workforce and see an overall increase in productivity.  Jack Welch spent years hawking his business model from GE which said companies should fire the bottom 20% of their staff based on performance reviews annually.  I worked at a company that did this one year then stopped because they created too many open positions that they couldn’t fill.  HR was crestfallen about their power mad dreams being crushed.  They tend to worship at the altar of St. Jack.

The key is letting the right people go, and Elon is in kind of a hurry, so he put the screws to everybody, making an 84 hour work week mandatory if you didn’t want to be simply fired for cause. (That is 12 hours a day, seven days a week.)  I mentioned last week they were having people print out the code commits for the last 30 days, and he had engineers from Tesla in to do some sort of code review process.

His need for speed meant that this review was laughably cursory at best and the rumor going around was that developers were ranked by the number of lines of code they had committed recently when determining who can laid off.

Up to 3,700 of the company’s 7,500 employees got the sack yesterday.  The office was closed, access badges were turned off, and if your Twitter company login stopped working the night before, that was a pretty good sign you were getting cut.

As noted at the top, getting laid off with some severance might be a blessing given the hellscape that working at Twitter was rapidly becoming.

The cut will get Twitter some expenses off the book once the severance is paid out and the inevitable lawsuits run their course.  But we don’t know if that will be enough because, you know, the advertisers.

Revive Vine

In a look to add something to the revenue mix, Musk put a group onto the Vine codebase with an eye towards reviving the short form video format that Twitter bought in 2014 then shut down in 2017, there being no money in short format video content.

The word is that Elon has assigned a team to get Vine back up and running, no doubt with an eye towards how well Tik Tok has been doing.  But unattended code does not age well and unless some of the original Vine team is still around, an early revival seems unlikely.  Once again, I’ve been there, with all the source code for a much simpler product, and my team spend well over a month just trying to successfully recreate the build system.

But the Vine project team doesn’t have a month.  Word is they were given two weeks to do it or they would all be fired.  Would you spend two weeks working on that or just started updating your resume and calling your friends on LinkedIn about open positions?

Blue Check Mark Negotiations

Another revenue scheme from the mind of Elon was to charge people for their blue check marks.  Those were introduced so that people of a certainly level of celebrity could verify the person’s actual identity so you would know you were following the real individual and now some parody account.  We don’t need that sort of chaos.

That would be crazy

His proposal was to open the gates and charge $20 a month for anybody who wanted a blue check mark.  He was a little vague on the validation side of things, but it didn’t matter because the celebs were not having it.  Elon got into a negotiation with Stephen King of all people, dropping the proposed price to $8 a month.

As somebody pointed out, that was rather like trying to charge Taylor Swift to perform at your stadium.  It isn’t the venue, it is who there is to see.  One of the magic bits of Twitter is that it managed to hit a critical mass of celebs and politicians and other notables, which is part of what makes the Twitter experience worthwhile.

Again, Elon is playing the buffoon card, a billionaire out there trying to make millionaires look cheap because they won’t pay for their blue check mark.  But not only is he once again waving a red flag at advertisers, he needs those celebs and such a lot more than they need him.  And, just to compound that situation, the presence of the famous makes the platform worth advertising on.  It is like he is trying to set his primary revenue stream on fire every day.

Infrastructure

Did I say something about not paying the bills up above?  Yeah, forget that.  Most recently, the word is that Elon has told the company that it needs to cut its infrastructure costs by $1 billion annually.

The estimate is that they spend $2 billion every year on infrastructure, so chopping that in half seems… unlikely.  Again, I have a nice thread on Twitter exploring the options if you are interested… there is some irony in that most of what I read about how Elon is trying to fix this horrible deal he couldn’t get out of is on the platform in question… but the idea seems pretty far fetched.

Yes, as with staffing, there is probably a tidy little sum that could be saved by optimizing or shutting down little used services.  But half is laughable unless he is willing to run a Rube Goldberg setup with multiple points of failure that could bring the whole enterprise down and be left unable to restore it.

As much as a pwipe of Twitter might seem amusing, it would be a costly affair.

Plans and Fallout

There has been some talk of people losing followers.  I lost eight over the course of the week, 1% of my small following.  All eight were shown as “account suspended or deactivated.”  While eight is a small number, movement on my total followers in excess of three coming or going over the course of a week is exceedingly rare.  Is it a sign?

There is also a good deal of talk about what the threshold should be for bailing on Twitter.  Certainly Musk can make things much worse on the site, and part of the reason for staying is to watch the struggle between his ego and his desire to not set $44 billion on fire in front of a world audience.

Then there is what one should do in a post-Twitter world.  As I noted previously, there is no real substitute for the experience.  Facebook, which is falling apart on its own, is intolerable to anybody who has even a few nutcase relatives they can’t block for fear of blow back at Thanksgiving.  Instragram is pictures Facebook, TikTok is spyware, and everything else falls into smaller and smaller silos.

For Twitter competitors, there are some MAGA hidey holes like Parler and Truth Social, where the snowflakes who fall apart at the mention of pronouns can feel safe.

Then there is Mastodon, which keeps coming up.  Every time Belghast writes an explainer about it, it seems less of an option.  It is siloed and insular in the way of any old school online forum, with social norms like not saying “Twitter” that will make current users hostile to any new comers.

The thing is, Mastodon could work, if it gained enough critical mass in the form of celebs and politicians and other notable people.  But the current long time users would hate that, because they didn’t go there because they loved the noisy chaos that can be Twitter.  It would be the September that never ended all over again, with the the old users complaining about how all these new people destroyed the vibe and the new users neither knowing nor caring.

As Belghast wrote, celebrity ruined the internet… at least for the people who arrived early.

(Also, watching various people try to explain/troubleshoot Mastodon on Twitter brings its own humorous surrealism to the who scene.)

So watching the train wreck and having no real parallel options is keeping most people on the Twitter roller coaster, even as they eye the exit turnstile.

Next Week?

And that is all in just one week.  The crazy train will not be derailed it seems and I am now curious to see what he will come up with next and how long it will take him to finally shut up and stop setting his fire to his own house of cards.